Electricity tariff will increase 10 percent in April, next year

State electricity company PLN may raise electricity tariff by up to 10 percent in April this year to offset the reduction of the government?s subsidy, Kontan reported on Thursday.

Speaking to reporters on the 2012 proposed state budget, in Jakarta on Tuesday, Finance Minister Agus Martowardojo said that the subsidy for electricity would be reduced by about Rp 20 trillion from Rp 65 trillion this year to Rp 45 trillion next year.

As the consequence of the lower subsidy, the electricity tariff would be increased by 10 percent to enable PLN to compensate the reduction in the subsidy, the minister said. The subsidy reduction will also result in the decline in PLN?s profit margin to seven percent from eight percent at present.

?The electricity tariff will be increased proportionately by 10 percent, except for households,? the finance minister said.

Meanwhile Industry Minister MS Hidayat said that he understood the government?s decision in reducing the electricity subsidy. ?I have told the business community that there would be an increase in the electricity tariff,? he added.

Hidayat said that he believed that the increase in the electricity tariff would not affect the growth of the manufacturing sector which was expected to reach 6.5 percent next year. (*)